Pot at Outside Lands: You can smell but you can’t buy

Susan Gentile dispenses mints at the Kiva Confections booth inside the Grass Lands area at Outside Lands at Golden Gate Park in San Francisco, Calif., on Friday, August 10, 2018. Grass Lands is the first ... more

Susan Gentile dispenses mints at the Kiva Confections booth inside the Grass Lands area at Outside Lands at Golden Gate Park in San Francisco, Calif., on Friday, August 10, 2018. Grass Lands is the first marijuana exhibit at a major music festival. less

For the first time, San Francisco’s Outside Lands music festival — which runs through Sunday — has added a sprawling marijuana exhibit called Grass Lands to its usual lineup of music, food, beer and comedy.

The expansion follows the legalization of recreational marijuana in California and is the first such feature at a major national festival, transforming a wooded area on the southern edge of Golden Gate Park. Among the features is a smell wall with various marijuana scents, and vendors include Kiva Confections, which infuses chocolate with cannabis; Barbary Coast, a marijuana lounge in the South of Market neighborhood; and Flow Kana, a Mendocino weed distributor.

Highlighting the uncertain legal status of marijuana, though, is this irony: You can smell, but you can’t buy. Regulations forbid the sale of cannabis on the festival site, so vendors can only promote their brands and take signups for deliveries.

Nonetheless, festivalgoers, vendors and industry experts said Grass Lands is a major step for the marijuana industry, which has expansion opportunities but also faces big challenges.

“It’s definitely a significant moment for the industry,” said Emily Paxhia, managing director at Poseidon Investment Management, a San Francisco firm that focuses on cannabis.

“It’s still cool, even without it (being sold),” said Mia Andreas, who was attending the music festival. She added that learning about the products and the forest setting of Grass Lands made it compelling.

Kristi Knoblich, co-founder of Kiva Confections, at Grass Lands, the marijuana exhibit at Outside Lands in San Francisco.

Photo: Roland Li / The Chronicle

Kristi Knoblich, co-founder of Kiva Confecctions, said the company is using the space to promote its products and test new flavors, which include eucalyptus, apricot and pineapple-flavored mints. Despite being unable to sell products — Kiva gave out out samples of its candy without cannabis added — Knoblich said the event is an unprecedented opportunity to reach a new audience and “normalize” marijuana. Kiva, which expects 10,000 visitors at Grass Lands this weekend, paid Outside Lands to be a sponsor and participate in the festival because of the marketing value.

“I think it will become more like beer and alcohol. It will be normalized and thought of in a way that’s more culturally acceptable,” Knoblich said.

The industry is grappling with new regulations and a state sales tax of as much as 45 percent, which may push more customers to buy weed illegally to avoid the taxes, she said.

Kiva’s products cost $3 to $27 before taxes.

“The taxes are far and away one of the most burdensome aspects,” Paxhia said. “It’s driving the prices up and making it really hard to sell in the legal market.”

Another challenge for marijuana companies is that major banks won’t do business with them because of legal risks. That’s forced most companies to use cash, though Kiva has found a credit union to work with.

They also are banned from advertising through tech giants like Facebook and Google, Paxhia said.

She hopes the event will promote the medicinal value of the drug.

“I hope it debunks some of the stereotypes … (that) people that consume cannabis are lazy or unmotivated or it’s a gateway drug,” she said.

Kiva offered free samples of mints, including flavors the company is testing before selling to the public.

Photo: Roland Li / The Chronicle

If laws change, vendors could potentially sell marijuana at Grass Lands, said Ricardo Baca, a former Denver Post weed editor who now runs a cannabis public relations firm called Grasslands (no relation to Outside Lands).

“I’m really confident it will be successful,” Baca said. “San Francisco just has the right attitude toward cannabis. Lawmakers understand this substance has been generally misunderstood. There are a lot worse recreational substances out there.”

Roland Li covers commercial real estate for the business desk, focusing on the Bay Area office and retail sectors.

He was previously a reporter at San Francisco Business Times, where he won one award from the California News Publishers Association and three from the National Association of Real Estate Editors.

He is the author of “Good Luck Have Fun: The Rise of eSports," a 2016 book on the history of the competitive video game industry. Before moving to the Bay Area in 2015, he studied and worked in New York. He freelanced for the Wall Street Journal, the New York Times and other local publications. His hobbies include swimming and urban photography.